American Airlines parent company AMR Corp and US Airways announced Thursday that their boards have approved a merger agreement to create the largest US airline.

The combined company, which will have an implied equity value of approximately $11 billion, will become a fully operating entity following American's pending bankruptcy proceeding, according to a news release.

The companies expect the deal to result in combined synergies of more than $1 billion. Following American's emergence from bankruptcy and the execution of the deal, US Airways will hold approximately 28 percent of the company, with American interests holding the rest, the news release said.

The deal follows a spate of earlier US airline mergers that have reshaped the sector and improved profitability. The added heft gives American a better chance of competing with fellow airline giants United and Delta in terms of offering more destinations in an efficient manner.

"The operational and financial strength of the combined airline is expected to enable continued investment in new products and technologies and will create exciting new opportunities for our people, even as we deliver strong cash flow and sustainable profitability," said American chief executive Tom Horton in a news release.

The combined airline will offer more than 6,700 daily flights to 336 destinations in 56 countries, the news release said. The new airline will be the largest US airline in terms of revenue.

Antitrust regulators and a US bankruptcy court must first give their approval before the merger can go forward, as American has been under bankruptcy protection since November 2011.

The idea of an American-US Airways tie-up has been floated since American went into bankruptcy protection.

Under the transaction, US Airways chief executive Doug Parker will become chief executive of the newly formed company while Horton will serve as chairman of the board through the middle of 2014 before stepping down, sources familiar with the matter said.

The deal follows a series of other US airline mergers that analysts say have left the US airline industry better positioned for long-term profitability.

"This looks like the end of a surprisingly successful round of US industry restructuring," said Richard Aboulafia, an analyst with the Teal Group Corp.

Projections for 2013 show that the US airline industry in terms of absolute profit would be the healthiest worldwide, said John Thomas, airlines specialist at LEK Consulting.

American has continued to operate under court supervision even as it sought to slash costs by renegotiating wage and benefit deals with its unions.

Prospects of a merger strengthened when union leaders publicly endorsed it in April, and talks moved ahead when the two firms signed a non-disclosure agreement to exchange confidential information in August.